6 Ways to Make the Most of First-Party Data
According to McKinsey, most companies are using only a fraction of the customer data in their possession. And it’s no wonder: First-party data is more relevant and cost-effective than data collected from second- and third-party sources, and the rich insights it offers can empower marketers to craft personalized and compelling ad experiences.
But many brands report that ROI on this data has failed to meet expectations. Why are marketers struggling to make the most of their first-party data, and what can they do boost returns?
Drawing on input from brands, agencies, tech providers and publishers, here are six challenges marketers must overcome to make the most of the data they collect on consumers.
1. Accuracy: First-party data is often incomplete and sometimes inaccurate altogether. The pitfalls of inaccurate data are many, ranging from a poor customer experience to wasted spend, with some estimates warning companies could lose an average of 12 percent on revenue.
Brands wanting to make the most of their data need to start by assessing and addressing accuracy. By filtering out inaccurate first-party data or augmenting it with other verified sources, brands can make sure they’re benefiting from a holistic view of their customers and activating only accurate consumer insights.
2. Scale: Though some brands like Facebook and Amazon have accumulated massive amounts of first-party data, others simply don’t have as much. That’s why many are finding it difficult to market at scale without making handsome payments to Facebook and Amazon to “rent” their data.
Brands can address this challenge by employing strategies such as lookalike modeling or employing real-time graph technology to expand reach. Graph technology, for example, uses a set of cookies or device IDs to find and target the same users on other devices, including TVs. Using these strategies and technologies will lead to improved campaign performance and greater ROI.
3. Latency: If a customer is browsing holiday getaways on her desktop at work but stops short of booking, how quickly can advertisers send a follow-up ad to her mobile device? This is the question of latency — the amount of time it takes for a system to update its data so advertisers can act upon it. Whether advertisers want to raise awareness about a brand or encourage a customer to make a purchase, low latency will enable them to reach consumers effectively across devices.
Fortunately, sophisticated technology is available for brands looking to analyze consumer behavior and serve ads across desktops, mobile devices and Smart TVs. By harnessing the power of cross-device solutions, advertisers can gain the insight they need for instant frequency management and real-time, cross-device targeting. But first, they’ll need to make sure their technology stack, whether single- or multi-vendor, is minimizing data post-back latency.
4. Universal Addressability: Once brands have collected various forms of first-party data, they’ll need to be able to transfer them across the various marketing and analytics platforms they use to reach consumers. Unfortunately, audience data is often comprised of different types of IDs that are not compatible across systems. It’s as if advertisers are collecting data in the form of different “data currencies.”
And as with financial currencies, advertisers will need to harness an exchange mechanism in order to be able to action that data in different places. Tech solutions are available that can enable advertisers to translate and activate different types of first-party IDs across devices and format environments, including mobile web, mobile app, Connected TV, Addressable TV and desktops.
5. Stability: A lot of advertisers’ data comes from cookies, but this data doesn’t last forever: As cookies decay over time, so does the information they carry.
Advertisers can tackle this challenge and make effective use of their data by using various types of IDs, not just cookies. They can also harness sophisticated technology that translates IDs, quickly converting cookies into more stable device IDs.
6. Regulation: Regulators around the world are stepping up to address growing consumer concerns about privacy. As a result, global marketers are facing unprecedented challenges to make sure the first-party data and collection and activation methods are compliant from region to region.
How can advertisers make sure they are using this data safely and respectfully? One solution is to make sure the technology they use is compliant with local regulations. Some technology platforms are built to accommodate regional differences, while other platforms offer only rigid choices in terms of first-party data activation. When choosing partners, brands must put compliance front and center.
Be the First
Today, the advertising industry boasts powerful technologies and capabilities that can transform first-party data into actionable and lucrative data insights. But marketers will need to overcome several challenges in order to make the most of their first-party data.
Marketers that take advantage of sophisticated (and compliant) data management technologies, cross-device identification solutions and a growing supply of addressable media inventory will be the first to meet these challenges. They’ll also be the first to see increased returns on their first-party data.